Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to load up your portfolio with some small-cap companies because of their superior growth potential and would like to focus on those that have actually been growing briskly, the Vanguard Russell 2000 Growth Index ETF (Nasdaq: VTWG) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in a lot of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Vanguard ETF's expense ratio -- its annual fee -- is a very low 0.20%. (Vanguard is known for low fees.) The fund is very small, too, so if you're thinking of buying, beware of occasionally large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

At roughly one year of age, this ETF is far too young to have its performance assessed. And as with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

What's in it?
Plenty of small-cap companies had strong performances over the past year. Ariad Pharmaceuticals (Nasdaq: ARIA), for example, surged 59%. Its sarcoma treatment ridaforolimus hasn't delivered the results investors had hoped for, but investors seem much more focused on the company's leukemia treatment, ponatinib. They need to remember, though, that FDA approval is never a sure thing.

Personal care products maker Nu Skin (NYSE: NUS) gained 38%, recently reporting second-quarter income up 45%. Sales of anti-aging creams are selling briskly in China and elsewhere in Asia, and while overall revenue rose 40%, revenue in China skyrocketed 150%. Management has pointed out that with every new product launch, the company's trial and penetration numbers are improving.

Kodiak Oil & Gas (NYSE: KOG) gained 28%, but its fortunes depend significantly on high oil prices. It has been benefiting from shale oil extraction, and posted strong results last year, but it's also involved in fracking, which has become quite controversial, and it disappointed analysts with its last quarter.

Other companies didn't do as well last year, but could see their fortunes change in the coming years. Oil and gas exploration and production company Energy XXI (Nasdaq: EXXI) gained just 2%, and will also fare better with higher oil prices. It's skilled at using advanced technology to wring extra oil from various reserves, and doing so via land as opposed to more risky deepwater endeavors.

The big picture
A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

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